ATO to target wealthy Australians, cryptocurrency investors

author-avatar By on March 12,2020
ATO to target wealthy Australians, cryptocurrency investors

Photo by Austin Distel on Unsplash

Rich Australians are paying about $770 million less in tax than they should be, robbing the system of hundreds of millions annually.

New data from the Australian Taxation Office (ATO) shows that while over 90% of high wealth individuals are doing the right thing by the tax office, the tax gap in 2016-17 for high wealth private groups (which includes individuals and companies who control a net worth of $50 million or more) was 7.7%, or approximately $770 million.

ATO Deputy Commissioner Tim Dyce said the majority of wealthy Australians are paying the right amount of tax and most underpayments were a mistake.

“The vast majority of high wealth private groups take their tax obligations seriously and are trying to do the right thing,” Mr Dyce said.

“Many of the issues we see are genuine errors and honest mistakes resulting from misunderstandings in applying the tax law or miscalculations.

“Our data shows that these groups will often voluntarily self-correct once they become aware of errors. This allows us to direct our resources towards the small number that are seeking to do the wrong thing.”

However, Mr Dyce also said that a small number of rich Australians are deliberately doing the wrong thing.

"Our research does also show that a small number of high wealth private groups are deliberately engaging in risky behaviour," he said. 

"This includes seeking to engage in artificial and non-commercial arrangements that are intentionally designed to avoid paying tax.

“While we continue to observe a small number that are deliberately engaging in tax avoidance, we are confident that our compliance strategies are tackling the bad behaviour we see from higher-risk taxpayers and their agents.”

From July 1, the ATO will be expanding the work of the Tax Avoidance Taskforce by introducing a new program focusing on high wealth private groups.

"Those seeking to obtain an unfair advantage by avoiding their tax obligations will attract our full attention and will be the subject of strong enforcement action," Mr Dyce said.

Mr Dyce said tax advisors deliberately trying to cheat the system would face hefty financial penalties.

“However, we know a small number of tax advisors intentionally do the wrong thing by placing their high wealth private groups’ clients into risky and even illegal tax avoidance arrangements," he said. 

"These tax advisors and others who promote aggressive tax arrangements risk being subject to significant financial penalties and face the prospect of prosecution.

“The mums and dads of Australia want confidence that wealthy Australians are paying the right amount of tax and that we are doing our job and dealing with those who are deliberately avoiding paying tax."

ATO to target cryptocurrency investors 

The ATO is in the process of contacting hundreds of thousands of Australians to remind them of their tax obligations when they trade in cryptocurrency, according to news.com.au.

Because cryptocurrency is considered a form of property (and therefore an asset) it is subject to capital gains tax and has to be declared. 

A spokesman for the ATO told news.com.au cryptocurrency investors should keep records to make it easier at tax time. 


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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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